Trade war between China and USA hits Micron

The trade restrictions that the U.S. has imposed on Chinese companies in recent years continue to receive responses from China. Now it is hitting chipmaker Micron, which is being kicked out of the Chinese market on flimsy grounds.

Trade ties between U.S. and China wane

Under Donald Trump, the U.S. has embarked on a rigid course toward China, partly to strengthen the U.S. economy and partly to protect it from Chinese espionage. Many Chinese companies are affected by trade restrictions; U.S. companies are not allowed to sell to them. This has led, for example, to the fact that Huawei cannot install current chips from U.S. manufacturers in its new cell phones. There are also high import tariffs and other restrictions. China has responded with very similar measures from the start.

Other fundamental disputes between the U.S. and China resonate in the conflict. For example, Chinese companies are known for stealing intellectual property from the Western world and offering copied products. Furthermore, the economic sanctions against Chinese companies can also be seen in relation to efforts to combat the ongoing human rights violations in China. Overall, this is thus much more than a mere dispute over economic supremacy.

Micron forced out of Chinese market

The latest victim of these disputes is the U.S. chip manufacturer Micron, which is no longer allowed to operate in the Chinese market. The reasoning of the responsible Chinese authority is thin: Micron has violated requirements and represents a security risk. It is completely unclear which conditions are meant. However, it is obvious that this is a political decision.

The exact consequences for Micron are not yet clear. It is only clear that larger Chinese companies are no longer allowed to purchase and install Micron chips. Whether the company will have to completely disappear from the Chinese market, however, remains to be seen. However, the step does not come as a surprise. According to media reports, the U.S. government had already contacted South Korea a few weeks ago to ensure that South Korean chip manufacturers would hold back in the event of a Micron sanction. However, South Korea has reportedly rejected that request: The country does not want to interfere in corporate affairs and does not want to restrain Samsung or SK Hynix, he said.

Sanctions against more companies?

It is not yet known whether China will also take action against other U.S. companies in the chip industry. Qualcomm and Broadcom in particular could still be forced out of the market. However, this is speculation. What effects Chinese measures against chip manufacturers will have in times of a particularly tense market situation also remains to be seen. Micron claims to generate 16 percent of its total sales in China and Hong Kong.